23 March 1998
Jeremy Vanke, Head of Policy, RAC.
The Budget (March 1998) is quite disappointing in that the Chancellor has taken an extra £2 billion from the motorist this year in increased fuel taxes, and has given back a fraction of that to public transport, to rural areas. It is a really pitiful amount that will not make it any easier for people to leave their cars at home.
The Chancellor has committed himself to a lower tax for smaller cars, but he has not really defined this. The Department of the Environment spent quite a long time trying to define an environmentally sensitive car, and failed to do so. So it appears the Treasury knows how to do it while the Department of the Environment does not. It is very difficult to say what is environmentally beneficial. Is fuel efficiency the right measure? In which case some older cars that are very polluting come under that. Is engine size the right measure? There is not a very direct relationship between fuel consumption and engine size. It is a very tricky area.
Our view is rather different to the Government's. If we want to relate fuel consumption and carbon dioxide emissions directly to the fuel efficiency of each car, the only direct way is to abolish vehicle excise duty altogether, and put the equivalent sum of money on the price of fuel. In that way, the more fuel you burn the more you pay. It is a straightforward link.
There is no straightforward link, however, between things like engine size and fuel efficiency. It depends on the type of driving that you do. It depends on your driving style. It depends on the state of maintenance of your car. And because of those three factors, engine size is a very crude indicator of environmental efficiency.
If it is done correctly, the typical or average motorist will pay exactly the same as now, whereas someone who drives less will pay less, and someone who drives more will pay more. In terms of the effect on industry, it is already under pressure to reduce the amount of driving its people do. A manager's time spent in a car is lost time. It is not productive time in the context of broader initiatives to manage business' transport needs.
There are problems with every alternative fuel on offer at the moment. Not least is from the consumer's point of view. Because of the performance characteristics, the intention of most buyers is that they buy an electric car to use in town, but they still have another car to use outside town. And yes, there is potential for cleaner fuels in urban areas where there are lots of people and where the health impact is greater. But let us not kid ourselves that these cars are completely clean. With electric cars, for example, you have to get the electricity to charge the batteries from somewhere. In the UK that comes predominantly from very polluting coal-fired power stations. So every alternative fuel has its environmental costs.
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